The five types of insurance frauds would be ranked in the order of severity from the worst to the least egregious as follows: exaggerating injuries, falsifying medical treatment or billing fraud, inflating damages, falsifying information on an application, and rate evasion respectively. Notably, even though all the five frauds entail integrity issues, they all bear different magnitudes of crime and legal consequences if discovered. First, exaggeration of injuries either by over-stating or faking injuries can lead to extremely serious consequences in both civil and criminal penalties (Crocker & Tennyson, 2002). For instance, the insurance company may refuse to compensate the insured all other genuine injuries and losses associated with the claim, the insured may be reported as a risk to the company, the revocation settlement, and prosecution and imprisonment, particularly in serious cases (Crocker & Tennyson, 2002). Additionally, billing fraud is deemed as a very serious crime in the health sector. Furthermore, in most states such as Pennsylvania it is considered as a crime, and violators can be jailed up to seven years and spend up to $15,000 in fines, in addition to legal fees and court costs (PA Insurance, 2018).
Furthermore, inflating damages is considered as a remarkable offense in the insurance sector. This is a misdemeanor charge that is often punishable by conviction of up to one year and other criminal fines such as compensation to the insurer for all economic losses attached to the false insurance claim (Crocker & Tennyson, 2002). On the other hand, falsifying information is a big crime and is often attached with significant repercussions. If false information is discovered, the insurance cover becomes void, and the insured may entirely lose their covers (Grant, 2016). Therefore, even if one’s application is approved despite bearing false information, misrepresentation may be discovered during a claim, which may result in huge losses for the insured. Finally, rate evasion is not a very serious crime compared to the first three frauds because most states such as California, the crime is considered a class 3 misdemeanor, which is the least serious misdemeanor, and class H felony, which is the least serious felony (O’Connor, 2016). Therefore, according to the weight of consequences associated with each fraud, it is evident that exaggeration of injuries tops the list, while rate evasion comes last.

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  • PA Insurance Fraud Prevention Authority. (2018). Health insurance fraud. Retrieved from
  • Crocker, K. J., & Tennyson, S. (2002). Insurance fraud and optimal claims settlement strategies. The Journal of Law and Economics, 45(2), 469-507.
  • Grant, B. K. (2016). Lying on insurance forms can come back to haunt you. CNBC, retrieved from
  • O’Connor, A. (2016). North California tackles insurance rate evasion fraud, updates captive laws. Insurance Journal, retrieved from